Why there's no need to fear competition in the NHS

Private companies could help change British healthcare for the better, writes Andrew
Haldenby.

In the State of Rhode Island in America, thousands of young people with poor mental health are receiving much better care than they did a decade ago. The cause is purely and simply the introduction of competition. Previously the health system was the worst of all worlds. It delivered an uneven patchwork of hospital services which was not only very expensive but also failed to catch young people in the early stages of alcoholism, drug use, depression and other disorders. In 2001, the local funder of healthcare joined forces with a private company, Beacon Health Strategies. The company completed an audit of the unsatisfactory current state of services and then set about joining them up and creating new opportunities for young people to get care before their conditions became too serious. As a result, the number of people needing hospital care has fallen sharply. Patients report extremely high levels of satisfaction with the new system. The reforms did not intend to reduce the overall cost of the system but because of the reduced time spent by patients in hospitals, they have done just that.

In the region of Pirkanmaa in Finland, hundreds of elderly people are receiving a much higher quality of hip and knee replacement than they did 12 years ago. Again, competition has opened the door to creative thinking and genuinely world class healthcare. Before 1999, doctors and managers began to be worried by two trends: rising demand for joint replacement operations and relatively poor quality due to long waiting times. In that year, the district came together with a private company to establish a new “hospital within a hospital” on the Tampere University Hospital campus. The new hospital, Coxa, would deliver all joint replacement surgery for the hospital district of 500,000 residents and revision operations for the entire nation. Coxa Hospital has a medical contingent of 11 fully qualified orthopaedic specialists, five anaesthetists and 50 nursing staff, with surgeons spending two-thirds of the week in the operating theatre. Less than 1 per cent of patients now suffer from any complications, compared to an average of up to 12 per cent for general hospitals. Following the success of Coxa Hospital, Tampere University is now looking at further opportunities to improve other kinds of specialist care, such as public-private partnerships for cardiology and ophthalmology services.

These findings should give Nick Clegg, Shirley Williams and Ed Miliband pause for thought. They have argued that competition undermines good patient care by splitting up services between different competing bodies. But as the success of Beacon Health Strategies shows, new providers can be the catalyst to bring services together. A lack of communication and co-ordination between NHS services has been a common complaint for years. Yesterday, Nick Clegg and Shirley Williams argued that “patients should come before profit”. But these examples (and many others) show that private companies have the ideas needed to change services for the better. It is worth repeating that other European countries are simply baffled by Britain’s latent hostility to the private sector in health care. They also wonder how British politicians can be so opposed to private treatment of patients when the NHS buys all of its supplies and equipment from private companies and when many of the 35,000 general practitioners in England are actually self-employed private contractors.

The last Labour Government tried to solve the problems of the NHS in two ways. First, an injection of new ways of working (like competition). Second, a remarkable increase in public spending (the NHS budget more than doubled, in real terms, between 1999-00 and 2009-10). The NHS budget is certainly not going to double in this Parliament and next. Nick Clegg, Shirley Williams and Ed Miliband want to put innovation to one side. What else do they have? If they don’t have another answer, then they will get a deteriorating service in terms of rising waiting times and a steady withdrawal of services from the public.

Andrew Haldenby is director of the independent think tank Reform. Its report Healthy Competition, published today, is available at www.reform.co.uk